Phat squiggly lines: November 2021

Opentrader_Phat-squiggly-lines-blog-1200x628.png

Phat squiggly lines is where pro traders get a technical take on the stock markets – with Kieran Neeson, Opentrader's in-house trading guru.

Market overview

It’s been a bumpy past few months in financial markets and the although the ASX 200 (ASX: XJO) reached new all-time highs in August, we’re now less than 1% higher than we were in the middle of June. Rising inflation is a real risk but it seems global equity markets are taking this with a grain of salt and are completely ignoring the noise bond markets are making. Only time will tell which of two has got this wrong. 

From a technical perspective, the XJO looks more bullish than bearish and is fast approaching an inflection point, so our bias is towards the upside heading into the tail end of this year. Having said that, the market is at short term resistance and has been trading in a very tight range, so there is no clear direction at present. 

XJO
  1. Short term resistance 
  2. inflection point

Stocks to watch

Westpac Bank (ASX: WBC) – The ugly duckling 

Westpac has significantly underperformed big four banks in recent weeks and has been absolutely crucified by the market off the back of corporate fines, missed earnings expectations, and then going ex-div. The stock is in free fall at the moment and hasn’t bottomed out yet, and as the age old saying goes, the more you try to pick bottoms, the more you get smelly fingers! So, we’re inclined to wait until a clear buy signal emerges. From a technical perspective and adding to Westpacs woes, the 50 moving average has recently crossed the 200 day moving average to the downside which is know as the ‘death cross’ and is a bearish signal, and hence why patience is required here. Having said that, we have our ‘accumulation’ hats on and are eagerly waiting for a sign that the tide is starting to turn. One more leg down would be welcomed as the cheaper we can buy the stock the better, and Westpac as a business isn’t going anywhere anytime soon so we’re comfortable to ride out a bit of volatility in the short term. 

WBC

1 – Death cross (50MA crosses 200MA) 

2 – Support level 

If you're not already, you should be trading like a pro at Opentrader.


Hold on a sec! You should consider whether any advice here is right for you. We don’t accept any responsibility for the accuracy of any information, opinions, or predictions we’ve provided, and we certainly haven’t taken your personal financial situation into account. Just a heads-up.